First electricity, now gas prices set to take off

Hard on the heels of steep rises in household electricity prices, gas prices are set to follow suit, with AGL seeking to raise prices by more than 10 per cent from the middle of next year.

The gas company has applied to the NSW government pricing regulator IPART, the Independent Pricing and Regulatory Tribunal, to raise gas prices by 10.4 per cent, which includes the anticipated rise in the consumer price index (CPI) for 2013-14.

The rise will mark the start of a steep round of price rises as the impact of rising gas exports from eastern Australia flows through to domestic prices.

It follows large rises in electricity prices, with a 20 per cent increase taking effect from July 1 alone.

With gas, several large gas export projects are being developed in Queensland which will push up domestic gas prices to international levels, which are around double those households pay at present.

The impact is compounded by the fact that AGL's long term gas purchase contracts from gas producers are expiring over the next few years, leaving it fully exposed to the anticipated surge in gas prices.

Of the foreshadowed price rise, the retail component is a rise of 3.6 per cent, with the network component relating to the use of the pipe network to rise 4.0 per cent and the carbon price to add another 0.1 per cent, before taking into account the rise in consumer prices.

Because it has yet to finalise its new gas purchase contracts, AGL has not indicated the likely rise in gas prices that will occur in 2014-15 and 2015-16 in its application to the regulator.